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U.S. Suggests Electric Firms Inflated Prices In California

The Federal Energy Regulatory Commission said today that two companies that sold electricity to power-plagued California might have engaged in actions designed to inflate prices there, potentially earning $10.8 million in excessive profits.

The agency said that unless the two companies, Williams Energy Marketing and Trading and AES Southland, could show within 20 days that they did not violate federal laws, the agency would require them to refund profits earned in April and May 2000.

The action comes a few days after the agency said it might require 13 generating companies, including Williams, to return as much as $69 million to California for charging prices that far exceeded the operating costs of their power plants.

The two steps, which are not directly linked, are the first efforts by the federal agency to address accusations that power companies have abused California's recently deregulated electricity markets.

California regulators and market experts have charged that generating companies jack up electricity prices by withholding available power plants to create an artificial shortage, forcing the state to buy power at higher prices. Generating companies have denied the accusations.

Williams, based in Tulsa, has a contract to sell electricity produced by two plants owned by AES Southland of Orange County, Calif.

The agency said it found that Williams and AES made so-called must-run generating units unavailable to the California Independent System Operator, which controls the state's power grid, even though the companies were receiving payments to keep those plants in service.

Because the units were unavailable, the agency said, California had to buy electricity from other, more expensive plants owned by AES.

Bill Hobbs, president of Williams Energy Marketing and Trading, said in a written statement that ''once all the facts are on the table, we are confident it will be clear that Williams conducts business legally.''

A spokesman for AES said he was confident the company's decisions would stand up to agency scrutiny.